Obama team takes heat over unemployment

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Bipartisan frustration boiled over on Capitol Hill Tuesday at the Obama administration’s inability to bring down the unemployment rate, with one liberal House Democrat telling top administration officials they have shown “no urgency” about fixing the problem.

After conceding that jobless rates will remain high in the near term, President Obama’s economic team found itself in the crossfire before the House Appropriations Committee, with Democrats saying more needs to be spent on priorities and Republicans saying more needs to be done to cut the deficit. Many lawmakers on both sides agreed that whatever the White House is doing, it isn’t enough.

“People are becoming desperate. I am their representative. I cannot politely sit and listen to this and not feel compassion for them and [expect] some from you,” Rep. Marcy Kaptur, Ohio Democrat, told the witnesses.

She blasted the panel, consisting of Treasury Secretary Timothy F. Geithner, Office of Management and Budget Director Peter R. Orszag and Christina Romer, chairwoman of the Council of Economic Advisers, saying they have paid more attention to fixing things for big banks and Wall Street investors than for average Americans, and called their testimony “dismaying and out of touch.”

But Mr. Geithner said the administration had had no choice but to stabilize the broader economy first, which meant making a priority of fixing Wall Street.

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“Those things were difficult to do. They were unpopular, but they were essential. And there was no path to unemployment improvement, there is no path to stability in house prices, there is no path to any basic improvement in the many challenges America faces today that did not start with fixing the crisis and restoring growth,” he said.

Unemployment is hovering near 10 percent, and the White House economic team said in its prepared testimony it will not get better, and “indeed the rate may rise slightly over the next few months” as some workers who had given up seeking a job return to the job market.

Recognizing the fragility of the economy, the Federal Reserve on Tuesday said it will keep interest rates at their current low level for an “extended” time. But the board’s Federal Open Market Committee did seem to see improvements in the labor market, saying it “is stabilizing” - an improvement over its last statement two months ago, when it merely said the deterioration “was abating.”

President Obama and leaders on all sides in Congress say the government still needs to focus on policies that create jobs. But they are sparring over how to do that.

Congress last year passed an $862 billion stimulus package to try to jump-start the economy, though the unemployment rate has risen anyway to well above what the administration projected. That high unemployment rate has actually increased the projected cost of the stimulus program because the government is paying out more in unemployment benefits than originally projected.

“More people have experienced Elvis sightings than have seen jobs created by the stimulus program,” said Rep. Jack Kingston, Georgia Republican.

Democrats said the solution is more infrastructure spending and for Congress to create a new fund and guarantee loans to help finance small-business investments.

“This is a country that was built on bricks and mortar, on fiber optics, and we are going backwards in this regard, rather than forward,” said Rep. Rosa DeLauro, Connecticut Democrat.

Republicans, though, said the solution is to be found in cutting spending, lowering taxes and removing regulations that tie business’s hands.

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